Dozens of disillusioned Liberal Party members have approached the Institute of Public Affairs, the free market think tank says, threatening to quit the party because of Prime Minister Tony Abbott's broken promise on the Racial Discrimination Act.

The IPA has emailed its supporters pleading for cash to fund a $38,000 attack ad which will use the Prime Minister's own words against him.

"Tony Abbott has given up but the IPA never will," the email says.

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The IPA will quote from Mr Abbott's speech to the IPA in 2012 when he said "freedom of speech is an essential foundation of democracy".

And in a further rebuff of the Prime Minister, the IPA is offering donors a copy of his comments signed by the News Corp columnist Andrew Bolt, who was successfully prosecuted under the current laws.

Mr Abbott phoned Bolt and John Roskam from the IPA to tell them he would be announcing the government would be abandoning its reforms ahead of Tuesday's public announcement.

Mr Roskam from the IPA urged the Coalition not to underestimate the "white hot anger" of the Liberal faithful in response to the "broken promise".

"We have been contacted by many IPA members who are also Liberal Party members who have said they will resign their membership from the Liberal Party over this broken promise from the government," he told Fairfax Media.

"The feeling from many supporters of the Coalition is a combination of deep sadness and disappointment and white hot anger."

He warned the Liberal Party base was becoming increasingly unhappy about the Coalition's decision to break key election commitments.

"This comes on top of Tony Abbott increasing taxes, not cutting spending and now implementing potentially a vast government program of surveillance of every Australian," he said.

"What many people can't understand is that he will compromise on a fundamental freedom but not an expensive, ineffective welfare scheme for the middle class."

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